How to find that first big customer

This is part of an ongoing startup advice series where I answer (anonymized!) questions from readers, like a written version of Smart Bear Live. To get your question answered, email me at asmartbear -at- shortmail -dot- com.

Freshman Salesman writes:

I’ve read somewhere in your blog about how you had a very large organisation as the first customer for your software. I’m putting myself in the same boat now with the solution I’m developing so could you tell me:

1. How did you reach out to your first customer?
2. How you convinced them to pay up when code review at that stage was nonexistent?

It’s rarely true that your first customer will be big. It wasn’t true for me either.

You won’t like my direct answers:

AdWords. Here’s the full AdWords story. But this was 2002 when AdWords was affordable and I had no competitors, so you can’t repeat that — it doesn’t matter how I did it.

I didn’t. I didn’t reach out, I didn’t know they reached the website, I didn’t know they were trialing, I didn’t call them to see how it was going, I didn’t convince them it was worthwhile. I had a $39.95 product that barely worked, no sales organization (except tech support, which often works better anyway), and I just hoped they’d run a credit card.

You have a more fundamental issue which, if remedied, will lead to the answers you seek.

To see the problem, let me start with possible solutions. Either of the following scenarios makes sense for a new startup going after a large-scale enterprise market:

You’ve identified a deep pain at a large company. You land a contract to build them the solution. (Maybe you worked there or a co-founder or investor has some juice). The contract says you retain the IP and are allowed to sell a product like this to other companies. (Often they’ll agree if it means a steep hourly discount or cheaper maintenance costs.) You build the product, then you have your banner customer and go get others. In the worst cast, you can’t sell to others, but at least you made money.

You think you have a great idea. You hit your network and the road, calling twenty people at large companies, all of whom are in your potential market. You can’t get to all the decision-markers, but you can find people who are influencers (here’s how) and who can accurately say whether your product would be desirable, and at what price. After interviewing everyone, you tailor your product accordingly, and when you’re ready for beta you have twenty people literally waiting to use it. Some will buy.

Your problem is that you don’t fall into either of these categories because you haven’t found any customers at all.

If you can’t find anyone to buy it, if you can’t even get those meetings, why do you think things will be different once you’ve built your product? And why do you think they’ll then buy the product?

Actually, you already know they will not buy, because you’re asking me how to“convince them to pay up.” If you had something genuinely valuable, that twenty people agreed they needed, you wouldn’t need to convince anyone.

Don’t tell me “they need to see a working product before they’ll have a chat” or any other typical, lame excuse engineers (including me!) make for not putting customer development before writing code.

You’re just stalling. Get your butt in the field, and you won’t have to ask those two questions.